From Technological Catch-Up to Innovation-based Economic Growth: South Korea and Taiwan Compared

Abstract

This paper sets out to analyse the divergent models pursued by South Korea and Taiwan in regard to technological catching-up and their ongoing transition towards innovation-based economies. It is found that South Korea`s former high-debt and chaebol-dominated model inclined it to pursue a Schumpeterian scale-based technological development, while Taiwan`s former pro-stability, small- and medium-sized-enterprise (SME)-based model tended to favour its emphasis on a neo-Marshallian network-based technological development. It will be argued that the state`s approach to economic liberalisation and firms` demand for capital for technological upgrading are the major factors that have underpinned the adjustment efforts of these two countries.